Traditional automakers need real vehicles to realize their electric dreams

Being the CEO of a global auto giant clearly requires a broad talent portfolio – a skill set to cover everything from re-engineering a crisis-ridden supply chain, to placing vintage bets on emerging technologies, to decide on a stunning name for a mid-range sedan.

But surely, as a basic requirement, they must be able to sell a car. The skill at issue here isn’t the same as that which launches several million vehicles into esoteric international markets, but the grinning, saber-toothed tricks that move an engine out of the garage forecourt. An unshakeable belief in the product is crucial for this. But it also seems, at this particular moment, unusually elusive.

Nissan last week perfectly illustrated the problem. Since becoming chief executive of Japan’s third-largest automaker in 2019, Makoto Uchida has looked like someone who carefully nurses a bird with broken wings back into flight. On his second anniversary in office, he declared an end to the company’s crisis. Uchida has resolutely earmarked $18 billion to accelerate the transition to electrification. From the tone of his presentation, the work of vision building and car flogging was firmly underway. The risk now is that the first hinders the second.

Automakers in the United States, Europe and Japan face similar challenges as car buyers are forced to choose, not just between different models and brands, but between competing technologies.

While it is clear that electric vehicles (or at least an alternative to internal combustion engines) are the future, and it will suit governments around the world to be seen as supporting the electric vehicle revolution, these certainties have not yet translated into coherent strategies for many companies. Nor has there emerged a wide array of compelling choices for customers.

There are still huge bets hanging around on the right technology investments, the speed of customer conversions and the building of the charging infrastructure. Toyota, the world’s largest automaker by sales, has recently been in a rush to make carbon the enemy rather than the combustion engine per se and convince itself and the outside world that its bet on a long-term spread between hybrid, hydrogen and battery-powered technology is the right approach.

Even Nissan, which pioneered consumer electric vehicles when it introduced the Leaf more than a decade ago, is still careful not to put a date on the death of the combustion engine. He has not yet claimed to go into the electric. In 11 years, he has repeatedly updated the Leaf into a nice (albeit expensive) little car, but has a limited range of other models. Even its stated goal of offering 23 “electrified” vehicle models by FY2030 includes about a third that will depend in part on fossil fuels.

The difficulty Nissan and others face is that, while they had leeway to act on an interim basis in the past, they are now forced to formulate their visions in the shadow of a single company.

Elon Musk’s Tesla has effectively cornered the vision market. Chinese newcomers have been able to do the same in their home market. With 600,000 electric cars sold in the first nine months of 2021, Tesla has a market capitalization of over $1 billion. Many factors are at work in this stunning report, but the most obvious is that Musk articulates certainty, while the incumbents, bold as their words are, manage to sound equivocal. Worse still, they seem to invite equivocation in their clients.

Uchida’s response was an attempt to foil the master’s vision. At the center of last week’s presentation were plans to build a pilot plant for its all-solid-state batteries within a few years, and to integrate them into consumer cars before March 2029. This technology , in which many companies are investing heavily to perfect, would be transformational for electric vehicles. Batteries, according to a series of engaging animations from Nissan, would allow cars to be made with lighter materials, in a much wider range of styles, with longer ranges and faster charging times. Even existing lithium-ion batteries, Uchida said, would be much cheaper in years to come.

The problem is that where concept cars and eye-catching animations were never a reason to put off buying a car, now they are. Big visions are fine, but they do strange things in the relationship between dealer and customer, as long as the state of the technological race is the most relevant factor.

Uchida’s promise of impending technological magic might lead the customer to conclude that nothing currently in Nissan showrooms is truly state-of-the-art. This means that, from the most junior dealership to the CEO, Nissan is placed in a position of seriously selling placeholders, while believing most fervently in a car that doesn’t yet exist.

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Video: Cars, companies, countries: the race to go electric

About Mohammed B. Hale

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